The Next Level of Digitization: Blockchain in Energy

As the energy industry continues to evolve, the ways in which companies innovating are becoming ever more complex. In todays distributed world, multiple systems are being implemented to keep operations running smoothly– and with added systems comes influxes of data. Now, businesses are finding it increasingly difficult not only store their data effectively, but to also analyze it accurately. To this end, innovators are starting to think about the ways in which energy companies store data, and whether it’s possible to take successful ideas from other industries and apply them to energy– namely blockchain technology.

Blockchain technology is most commonly known for having transformed online transactions. Digital currency systems like Bitcoin are enabled by blockchain technology; a method by which every transaction is essentially recorded and linked at an incredibly granular level on what’s called a ‘block.’ These blocks create a blockchain—and since each block must be completed before another can be created, authentications are decentralized. With decentralization, blockchains are able to connect disconnected data; which is where this concept becomes relevant and even aspirational for the energy industry.

What impact can this technology make in the energy industry? Energy companies handle massive amounts of incredibly granular data, but it’s still imperative that they have compliance as well as accurate information and reporting across departments and initiatives. Some organizations, such as RWE and Filament, are starting to explore how blockchain technology can help.

In the case of energy, independent wind and solar farms are feeding into power grids in short, sometimes unpredictable intervals that require nimble, decentralized transaction systems. Large utility companies are in the midst of researching how they can apply blockchain technology to the grid. As the industry evolves, so must technology. “I see it as complementary to renewables,” said Michael Liebreich, chairman of Bloomberg New Energy Finance. “The old system of a few big power plants and vertically-integrated utilities didn’t really need blockchain.”

This innovation is likely to start with optimizing energy consumption, billing information, and with smart meters, but energy innovators are excited and optimistic about the many additional use cases that are likely to present themselves as the technology is further implemented and tested. Carson Stoecker, head of blockchain research at RWE, hypothesized, “there will be a machine-to-machine economy in which machines carry out transactions among themselves. Decentralized Internet technologies like blockchain will become the transaction layer for this.”

In order for energy companies to keep up with advances in how data is recorded and stored, it’s imperative they view ‘going digital’ holistically. Many companies succeed in creating a cohesive front-end experience for their customers, focusing on consumer-facing billing and monitoring systems. While these systems are important, backend automation is just as essential to a positive customer experience.

With centralized and automated backend systems, companies can track their data and gain insights from customized reports. While the energy industry will likely continue to adopt blockchain technology in the years to come, the quickest way to gain the same type of cohesive data storage and analysis when dealing with massive amounts of granular data is with a centralized backend platform. Both methods allow for securely storing information in a way that provides the visibility organizations need to make smarter business decisions based on accurate, real-time data.

For more on how blockchain technology is transforming the gridchain, hear from Mercatus, RWE and Intel.